He wants counties to shift health care savings to welfare

California’s counties are leery of Gov. Jerry Brown’s budget maneuver to immediately siphon money from local coffers, leaving behind an IOU that would be repaid through savings realized much later.

San Diego County officials are among the skeptics, given the strained fiscal relationship historically between the state and local governments. The county, based on an early review, has $40 million on the line over the next few years.

Brown argues that overall, counties will save as much as $300 million immediately — and $1.3 billion annually in three years — when thousands of low-income Californians become eligible for subsidized health care starting Jan. 1 under the new federal Affordable Care Act.

In a complicated move, Brown wants to quickly lower by a like amount state payments to counties for welfare programs, such as CalWORKS and child care. That would force the counties to shift health care savings to pay a bigger share of those programs.

Without the money swap, Brown reasons, the state would be paying twice for the same health care service: once to counties and again as part of its obligation under the federal program, also known as “Obamacare.”

“There are going to be costs imposed on the state budget. Those costs represent burdens taken away from the counties. … We feel it’s only fair the counties not be paid for what they’re not doing,” Brown said.

County officials, including those in San Diego, say the funding swap is premature because the final number of new enrollees and accompanying costs will not be known for some time. They also note that the federal government will be picking up a bigger share of the tab early on so the state really won’t be out as much money as soon as Brown says.

“There is more that we don’t know than what we do know. Everything is up in the air,” said Andrew Pease, finance director for San Diego County’s Health and Human Services Agency.

For example, San Diego County is concerned that the supposed $40 million in savings could be offset by the county’s rising ongoing obligation to provide health care for those who do not qualify for Medi-Cal benefits. Thus, the county could be stuck with a higher tab for welfare since it won’t realize as much savings in the health care field.

“Any money that is going to be taken away right now is a shot in the dark,” said Greg Cox, chairman of the county Board of Supervisors.

Cox offers this alternative: First review a few months’ worth of complete data and use that information to figure out how much each county saved in health care costs, if any. Then, send the counties a bill or subtract it from other state payments.

“A more honest way to deal with it is let’s have a settling up later when we know what the full costs are. If there’s a need to give back some of that money, so be it,” Cox said.

The California State Association of Counties warned that the governor’s “aggressive” approach to take money first “will force counties to cut into safety net services they provide today.”

Brown signaled he is open to adjusting the final amounts later, but still wants a share of the money now.

The hesitancy by counties is understandable, given their history of conflicts with the state over money.

Gov. Pete Wilson, a Republican and former mayor of San Diego, in the early 1990s started the practice of taking a large share of local property tax dollars to pay for some state programs.

The state during a subsequent fiscal crisis also borrowed from county coffers, prompting local governments to mount a successful initiative campaign in 2004 that capped how much could be taken and how often.

Two years ago, Brown and lawmakers imposed a prison realignment program to send low-level inmates to county jails, along with some money for their housing and care. That program is rife with controversy. Critics say the state is shortchanging counties for costs and some of the inmates set free by cash- and space-strapped jailers have gone on to commit serious crimes.

The Brown administration acknowledged the cost implications of the health care funding shift are far from certain because the number of enrollees and other expenses are still to be determined.

“Everything is in flux right now,” said Diana Dooley, Brown’s Health and Human Services Agency secretary.

Dooley said for now it’s a straight dollar-for-dollar swap. But she doesn’t rule out having counties take over more welfare programs in the future.

Senate President Pro Tempore Darrell Steinberg, D-Sacramento, characterized the upfront charge to counties as a “down payment” on a program that would reap benefits.

However, he believes the $300 million figure is simply too high. Instead, he argues for a smaller amount up front that could grow later when the actual costs and savings are “trued up.”

“The problem we have here is that everybody is working off of theory as opposed to real experience and numbers,” Steinberg said.

Steinberg is worried that the $300 million Brown wants could force counties to trim mental health programs and other vital social services.

Brown, counties and lawmakers are expected to negotiate the final formula as part of the state budget negotiations or as part of a special session on health care that runs through the summer.